Gone are the days of the homogenous customer base. A community bank’s reach may span multiple states, varying customer demographics, a wide range of business needs, and an ever-changing competitive environment with near-infinite options of products and services.
The 39 branches of Miles City-based Stockman Bank of Montana are spread across the wide expanse of the state. The $5.4 billion bank includes customers located in larger cities and some in very rural locations, sometimes up to 100 miles from the nearest branch. The bank serves a mix of commercial and agricultural customers, in addition to its consumer population. Paula Kurkowski, senior vice president and director of bank operations, says that the bank has to decide what will have the most impact and is worth the time and resource investment.
When considering an initiative, like contactless payments, Kurkowski says that Stockman Bank starts with national data, which shows that contactless payment volume is increasing due to its convenience. Even with this research, “We don’t really know for sure if our customers want it,” Kurkowski said. National trends don’t necessarily translate to a community bank.
As banks continuously weigh offerings for their customers, decision-makers ask themselves: What types of customers will benefit? Will we see high levels of adoption? And what will the impact be on our employees?
“You can’t please everyone” is an understandable mantra, but whom should banks seek to please … most? Some? The customers of today or the customers of tomorrow?
Determining customer needs
Understanding customer needs is always a challenge and collecting feedback isn’t straightforward. This becomes even more complicated for banks that have significant geographical variations (rural vs. metro) or customer types (agricultural vs. industrial). They have to consider a broader range of outcomes, particularly when it comes to implementing new technology.
Stockman Bank’s branches and call center are good at passing along customer requests, but Kurkowski also admits that sometimes she hears about a product or service “on the street” that another bank is offering or a customer thinks might be useful. “We’re constantly rolling out new services,” Kurkowski says, “Constantly building on something. It’s an ongoing conversation at all levels.”
Chris Bailey, senior vice president and chief technology officer at The First National Bank of Carmi in Illinois, said one of the bank’s main criteria for providing new services to customers is speed: Can it make business happen more quickly?
The $610 million bank has 12 branches across Illinois and Indiana. Like Kurkowski, Bailey finds it difficult to determine exactly what customers want. “We ask clients; we say, ‘Here are three things. Would you like these?’ And the answer is, ‘Yes, all of them.’” Bailey laughed. “That’s kind of the bad part about asking clients if [they’d] like this functionality: They almost always say ‘yes’.”
Bailey turns to data to answer some of the “what’s next?” questions. He relies on analytics at the branches, looking at transaction patterns across different channels. The bank finds that many of its agricultural clients still want a relationship manager to visit the farm, while commercial clients are happy to do much of their business remotely through products like cash management, treasury tools and digital signatures on documents.
Bailey said the bank also looks to industry conferences and talks to other bankers to learn about new ways it can serve its customers. Through these conversations, he sometimes learns about smaller fintechs that have unique product offerings but don’t have much exposure in the community banking world.
Preparing customers for new technology
Kurkowski acknowledges that Stockman Bank’s metro-located commercial clients tend to be more sophisticated but says that they’re also seeing more farmers and ranchers who are just as savvy as their larger business customers. Yet any new rollout takes planning, even for customers who are eager to adapt.
Undeniably the Covid-19 pandemic impacted the strategy that many community banks had in place to offer new products and services. Anything that facilitated online, digital or remote access became a high priority. Kurkowski said that Stockman Bank began to offer online account opening in 2020 and it has really taken off, with customers realizing the convenience it offered regardless of their physical proximity to a branch location.
The First National Bank got lucky and had upgraded its online and mobile banking right before pandemic-related lockdowns happened in 2020. Customers flocked to the new platforms, especially mobile. Bailey said that the adoption among their customer base was “amazing.”
Outside of pandemic-related initiatives, community banks often look for platforms or services that align with their overall bank vision. First State Bank Nebraska in Lincoln relies on technology to support its growth strategy. The $864 million bank has looked outside of its geographical region and has several loan programs which are largely focused on mergers and acquisitions of businesses across the United States.
“We feel it is important to reach outside of our normal trade area to find niche lending opportunities to help us continue to grow but still maintain a reasonable level of risk in our loan portfolio,” said Keith Jantzen, chief lending officer. As the bank continues to seek new opportunities, Jantzen knows that having the right technology that can “grow with the bank” is critical.
Any changes that are customer-facing require a lot of communication. And even the best-laid plans such as newsletters, website banners, or emails (or all of the above) can be ignored, leaving customers caught off-guard when something new is rolled out. This is where banks often face additional challenges among customers that are willing to dive in and try something new and those that are more hesitant. Stockman Bank prepares its centralized customer service team for anticipated customer calls and questions. The branches are equipped with Chromebooks so if a customer comes in with a question about online banking (for example) a customer service representative can walk that person through the necessary steps.
The First National Bank implemented eSignature platform Lightico and bank employees found a clever way to introduce customers to the product. Lightico can send customers a text message with a link to open a mobile browser so the customer can sign. If the customer opts to come into the bank to sign a document, the bank employee will still initiate a Lightico e-sign session, telling customers that they’re welcome to still come in, but point out that it could be handled remotely next time if the customer chooses. It’s also an opportunity to walk customers through the e-sign process if they have questions. “We understand that we’re not going to get 100 percent conversion,” Bailey said, “but the folks who do try it out are generally pretty happy.”
Getting customers to try something new is always a win.
Providing the best customer experience
Bailey finds that one of the biggest hurdles is finding technology that integrates with the core accounting system, an absolute must-have. Even if the bank uncovers a fintech that can meet customer needs, it may rely on a third-party integration or have terrible integration, which can reduce operational efficiency.
It can also impact the customer experience, resulting in a broken or incomplete customer journey (an online loan application that cannot be fully completed online, for example). The “2021 Digital Banking Report” by Lightico found that 45 percent of financial institutions are interested in investing in customer experience technology; yet, as many banks discover, deciding what deserves attention is always a difficult question.
“The biggest challenge is correctly identifying the links in the chain that would most benefit from technology to improve the speed, efficiency and customer experience as well as identifying the solution that best fits that need,” said Zviki Ben-Ishay, Lightico’s CEO and co-founder.
Research and data are a good place to start, but this comes as a supplement to “know your customer” and also “know your employees.” Banks have to determine what experiences will have the biggest impact with the resources available.